Since humanity exists, we wonder about how COOPERATIONreally works

The recent developments tell us…

OUR NATURE + OUR SITUATION + OUR THINKING

= OUR BEHAVIORThinking alone prevents us from cooperationLet’s think together how to cooperate.

REVELATIONBrussels, June 26, 2013

• How should a group of farmers share the cost of a common irrigation or drainage system?

• How should the countries in the world share the cost of reducing global warming?

• How should grown-up siblings share the burden of caring for their elderly parents?

• How do the language technology providers cooperate to build the future European Language cloud?

CASES OF COOPERATION

prioritize organize mobilize

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Cooperation Drivers

• FEAR • GOODWILL• REWARD

USE ALL OF THEM

THE GOOD, THE WORLD

THE GOOD, THE WORLD?

But there is one QUESTION.

IF cooperation is S.GOOD,

WHY is it so F.DIFFICULT?

SHOWSTOPPER

Working together means sharing your Private Information (PI)

When individuals have private information about their own willingness to pay for the public good, they may be tempted to pretend to be relatively uninterested, so as to reduce their own share of

the provision cost.

MECHANISM DESIGN:Non-Cooperative Games Theory

• Mechanism Design theory is a breakthrough on the level of Einstein and Adam Smith.

• Social problems are non-cooperative games

• Institution is a communication system

• Pareto efficiency: No one can be made better off without making someone else worse off.

• When individuals have Private Information about their own willingness to pay for the public good, they are tempted to pretend to be relatively uninterested, so as to reduce their own share of the provision cost.

• Hurwitz, 1972, individualism works against public goods: people would not reveal their true willingness to pay. «No mechanism with Pareto-optimal outcome exist In in an exchange economy with dominant strategy for agents is to report PI truthfully»

• Private Information Precludes Full Efficiency• If participation is voluntary and decisions to start the project must be

taken unanimously, free-riding destroys the project. Probability of funding the public project is zero despite everyone knowing that they can be jointly better off if the project is funded.

MAJOR TAKEAWAYS

• IF there are no income effects on the demand for public goods (utility functions are linear = the value of public good is equal to all participants),

• THEN there exists an incentive-compatible class of mechanisms in which (a) truthful revelation of one’s willingness to pay is a dominant strategy, and (b) the equilibrium level of the public good maximizes the social surplus (mechanism is incentive efficient).

THE CLARKE-GROOVES MECHANISM

• Each agent is asked to report willingness to pay for the project.

• The project is undertaken if and only if the cost of the project is lower than total willingness to pay.

• If the project is undertaken, each agent pays the balance between the cost of the project and everyone else’s reported total willingness to pay.

• With such “taxes” each agent “internalizes” the total social surplus, and truth-telling is a dominant strategy.

THE CLARKE-GROOVES PROCESS

• Public good development effort can be started with Clarke-Groves mechanism (“non-participation tax”) IF:- budgeting is efficient, (all collected money are spent efficiently, no private gain is suspected), OR- value of result is the same to all agents (no clear difference in value must be perceived or expected), OR- perceived value of shared Private Information is Zero

• otherwise:- No unanimous decision of association members must be required to launch effort (there must be decisive Committee), or- Participation must be mandatory for all members

CONCLUSION

INDIVIDUAL ENTITIES ACTING TOGETHER

• Setup: Industry gathering of businesses.• Incentive: Outside entities, changes of the landscape pose

more threat to members individually than to each other as competitors. Members can greatly benefit from cooperation by obtaining competitive advantages and creating public good in sharing business information and cooperating.

• Mechanism? We can either make all members to participate, or convince them all to achieve consensus, or carry out less than global initiative with motivated core nucleus of participants.

www.asapglobalizers.com

COOPERATION EXAMPLES

www.alcus.org

http://www.elia-association.org/

www.gala-global.org

www.oasis-open.org

www.w3c.org

GALA CRISP(Collaborative Research, Innovation and Standards Program)

www.lt-innovate.eu ???????????????????????

LT-Innovate OSCAR project ?

COOPERATION EXAMPLES

DISCUSSION

Serge Gladkoff serge.gladkoff@gmail.com, Logrus International